Fraud

State of play.

• The Biglaw insider trading ring remains the dominant criminal development: 30 defendants charged across Sidley, Latham, Cleary, Goodwin, Weil, Willkie, and Wachtell, with nine guilty pleas, named co-conspirators still employed at Biglaw firms as recently as 2026, and the investigation explicitly ongoing (→ 30 Charged in Decade-Long Biglaw Insider Trading Ring Worth Tens of Millions, Ex-Wachtell lawyer in insider trading ring later joined investment bank).
• The DOJ's National Fraud Enforcement Division is deploying infrastructure at pace: the West Coast Healthcare Fraud Strike Force is operational across Northern California, Arizona, and Nevada; the FOCUS initiative formalizes data-miner qui tam partnerships; and CMS has mandated accelerated Medicaid provider revalidation from all 50 states .
• Super Micro's export-control indictment has compounded into a multi-front exposure: DOJ charges against three individuals for diverting $2.5 billion in AI servers to China sit on top of prior Nasdaq delisting, SEC accounting charges, BDO's adverse internal-controls opinion, and active investor class actions — the template for technology-company fraud exposure in 2026 (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• State AGs and the FTC are running a coordinated consumer-fraud wave targeting deceptive pricing, junk fees, and MLM earnings claims, with social media scam losses documented at $2.1 billion in 2025 and the SEC's contested "voluntary" disclosure ruling reshaping whistleblower sequencing calculus (→ Federal and State Regulators Target Grocery Chains, Landlords, MLMs, and Credit Agencies, FTC Reports $2.1B Losses from Social Media Scams in 2025).
• For counsel advising Biglaw firms, technology companies, healthcare providers, or federal contractors, the practical baseline is simultaneous exposure across criminal, civil, and regulatory channels: information-barrier failures now carry criminal conspiracy liability, export-control violations compound into securities fraud and investor class actions, and FCA enforcement has expanded to cover DEI certifications, Medicare enrollment forms, and algorithmically detected billing anomalies.

Where things stand.

• FCA enforcement is at record levels and expanding in scope. DOJ FY2025 recoveries of $6.8 billion — the highest ever — are anchored in healthcare but now explicitly extend to DEI employment practices through the Civil Rights Fraud Initiative, with the IBM $17 million settlement as the template for qui tam plaintiffs .
• The FOCUS initiative formalizes data-miner qui tam partnerships. Data miners filed a record 1,297 FCA cases in FY2025 and accounted for over 45 percent of complaints since FY2024; FOCUS creates a pre-filing consultation channel that DOJ will use to triage quality and potentially strengthen enforcement posture against weaker algorithmic suits .
• Federal contractor DEI certifications carry live FCA exposure. FAR clause 52.222-90 under EO 14398 requires certifications that violations are material to contract performance, with flow-down obligations to subcontractors and a "reasonably knowable" oversight standard; a legal challenge is pending but has not stayed implementation .
• Healthcare fraud enforcement has a new geographic and structural footprint. The West Coast Strike Force adds Northern California, Arizona, and Nevada to an existing nine-district model; CMS is running predictive audits on hospice providers and has imposed an accelerated Medicaid provider revalidation mandate on all states; and the Eleventh Circuit has expanded criminal exposure for false ownership disclosures on CMS-855 enrollment forms .
• Junk fee litigation has structural momentum. The FTC's Rule on Unfair or Deceptive Fees (effective May 2025) and California's SB 478 have accelerated class actions and mass arbitrations with exposures exceeding $10 million per case; state AGs are filing parallel actions (→ Surge in "Junk Fee" Class Actions Targets Hidden Pricing Practices, Federal and State Regulators Target Grocery Chains, Landlords, MLMs, and Credit Agencies).
• Whistleblower infrastructure is expanding on multiple fronts. The GAO has validated whistleblower program efficiency; FinCEN has proposed awards of 10-30% for AML and sanctions violations; the SEC OIG has launched an internal cash awards program; and the SEC's narrow "voluntary" disclosure standard — denying an award to the Deutsche Bank ESG whistleblower who published in the WSJ before filing — is now a contested interpretive question .
• Prediction markets are now a regulated enforcement zone. The CFTC's first insider-trading action on event contracts, combined with the DOJ's classified-information prosecution of Van Dyke and Kalshi's candidate suspensions, establishes that existing commodities and securities fraud frameworks apply to these platforms .
• AI-powered wire fraud has become the dominant financial crime vector. According to FBI IC3 data cited in practitioner reporting, cybercrime losses reached $16.6 billion in 2024; business email compromise has surged since generative AI became widely available; and Deloitte projects GenAI deepfake fraud losses could reach $40 billion in the US by 2027 (→ AI-Powered Wire Fraud Surges as Deepfakes and Social Engineering Overwhelm Traditional Defenses).
• COVID-era fraud recovery has restarted at scale. The SBA referred 562,000 accounts totaling $22.2 billion to Treasury for collection and to DOJ for potential criminal investigation, coordinated through the White House Task Force to Eliminate Fraud .

Latest developments.

• DOJ's FOCUS initiative creates a formal pre-filing consultation channel for data miners; data miners filed over 780 FCA cases through mid-FY2026 and accounted for over 45 percent of complaints since FY2024 .
• West Coast Healthcare Fraud Strike Force launched across Northern California, Arizona, and Nevada, targeting hospice, sober home, and wound care providers under the new National Fraud Enforcement Division .
• CMS mandates accelerated Medicaid provider revalidation from all 50 states, with hard deadlines for revalidation strategies targeting high-risk providers lacking NPIs or recent screening; providers face potential accelerated audits and exclusion .
• Super Micro export-control indictment charges three individuals with diverting $2.5 billion in AI servers including Nvidia chips to China; Munger Tolles and AlixPartners retained; SEC and BDO reviews ongoing; investor class actions underway (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• FERC imposes $1.1 billion penalty against American Efficient for fraudulently selling energy efficiency resources into PJM and MISO capacity markets — characterized as one of the largest frauds in the agency's history .
• Widespread iCloud phishing campaign targeting Apple users globally harvests Apple ID credentials and financial data through fake storage-full notifications; Apple has confirmed it never sends unsolicited payment requests via email or text (→ If you see this iCloud message on your iPhone, don’t click it—it’s a scam).
• JPMorgan civil suit by former banker Chirayu Rana against senior executive Lorna Hajdini became public in May 2026; both the Manhattan DA and JPMorgan's internal investigation found no supporting evidence; documented inconsistencies in Rana's account will shape discovery and credibility determinations (→ JPMorgan Banker Sues Executive Over Sexual Assault Claims; Bank Denies Allegations).
• Additional Biglaw firms named as newly unsealed documents in the Nourafchan insider trading ring expand the scope of implicated institutions; unnamed co-conspirators still employed at Biglaw firms as of 2026 .

Active questions and open splits.

• Biglaw information-barrier liability after the Nourafchan ring. The indictment names seven elite firms and references unnamed co-conspirators still employed at Biglaw institutions; the open question is whether DOJ pursues civil actions against the firms themselves for breach of fiduciary duty and whether the case triggers regulatory scrutiny of information-barrier protocols industry-wide (→ 30 Charged in Decade-Long Biglaw Insider Trading Ring Worth Tens of Millions, Ex-Wachtell lawyer in insider trading ring later joined investment bank).
• Super Micro's compounding fraud exposure. The export-control indictment sits on top of prior Nasdaq delisting, SEC accounting charges, and BDO's adverse internal-controls opinion; the unresolved question is whether management-knowledge evidence surfaces, whether the SEC investigation produces additional charges, and whether the indictment triggers material restatements that reset investor class action exposure (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• Whether the DEI-FCA enforcement theory survives constitutional challenge. The IBM settlement establishes the DOJ's theory, but a coalition challenge to EO 14398 is pending; an injunction would freeze the DEI-FCA enforcement vector while denial would accelerate qui tam filings .
• SEC's "voluntary" disclosure standard for whistleblower awards. The Fixler denial turns on whether media publication before regulatory filing disqualifies a claimant; if upheld, it structurally disadvantages whistleblowers who use journalism as their primary channel and reshapes the sequencing calculus for every potential SEC whistleblower .
• FOCUS initiative's effect on FCA defense strategy. DOJ's pre-filing vetting process for data miners may improve triage quality, but it also signals that algorithmically generated suits lacking direct-knowledge relators will face heightened scrutiny — creating potential grounds for early dismissal motions against low-quality data-miner complaints .
• No-fault reimbursement eligibility after kickback violations. The Second Circuit's certification to the New York Court of Appeals leaves hundreds of similar cases in limbo; insurers cannot rely on categorical disqualification while providers facing kickback allegations have strengthened reimbursement defenses pending the state court's answer (→ 2nd Cir. Vacates GEICO Win in NY No-Fault Kickback Case).
• COVID-era loan fraud due process in administrative collection. The SBA's mass referral of 562,000 accounts raises unresolved questions about borrower notice, adequacy of defenses in Treasury's administrative collection process, and the threshold for DOJ criminal charging decisions at this volume .

What to watch.

• Expansion of the Biglaw insider trading investigation — whether DOJ unseals additional defendants, pursues civil actions against implicated firms, or triggers bar disciplinary proceedings against named attorneys.
• Super Micro SEC investigation and BDO audit findings — whether management-knowledge evidence surfaces and whether the export-control indictment produces material restatements that reset investor class action exposure.
• State Medicaid revalidation strategies submitted to CMS by the May 23 deadline — which states face federal consequences for inadequate plans and whether accelerated audits produce a new wave of provider exclusions and FCA referrals.
• New York Court of Appeals answer to the Second Circuit's certified question on no-fault reimbursement eligibility — the ruling will reset leverage in hundreds of pending no-fault fraud cases.
• Outcome of the constitutional challenge to EO 14398 and FAR clause 52.222-90 — an injunction would freeze the DEI-FCA enforcement vector; denial accelerates qui tam filings.
• FERC's American Efficient $1.1 billion penalty on appeal — the constitutional challenge, if successful, could threaten FERC's disgorgement authority across all market-manipulation enforcement actions .